Decentralized Utilization Incentives in Electronic Cash

Master of Engineering Thesis

May 20, 2016

Abstract:

Many mechanisms exist in centralized systems that incentivize resource
utilization. For example, central governments use inflation for many reasons,
but a common justification for inflation in practice is as a means to
incentivize resource utilization. Incentives to utilize resource may stimulate
economic growth. However, the asymmetry of economic control and potential
abuses of power implicit in centralized systems may be undesirable. An
electronic cash design may be able to create resource utilization incentives via
decentralized mechanisms. Decentralized mechanisms may be economically
sustainable without centralized and potentially coercive forces.

We propose
Hourglass, a novel electronic cash design that provides a decentralized
mechanism to encourage utilization via expiration dates. Constructed in this
way, decentralized utilization incentives may have less potential for coercive
abuses than more centralized methods, but may be similarly effective in their
ability to incentivize utilization. We present the Hourglass system at multiple
levels of detail: a design overview, a minimal kernel framework, a series of
descriptive refinements, and a concrete implementation as a fork of Bitcoin (a
popular electronic cash protocol in common use). We also present several
potential applications of Hourglass, such as renewable resource markets,
spectrum allocation, stock issuance, and currency.